Daily News Digest- 12th Nov'14

Thought of the Day:

Today in History:

Following made the Headlines:

India:

• Snapdeal leaves shoppers high & dry on sales day: Snapdeal, one of the country's largest online retailers, did a Flipkart on Tuesday , failing to deliver on its promises of big discounts and speedy deliveries on its Savings Day sale. The mess-up evoked the ire of hundreds of online shoppers, who took to social media to accuse the e-tailer of cheating them in the name of a `big sale'. “After spending crores to advertise for today's sale, Snapdeal payment checkout page is not working,“ tweeted Rohit Bhardwaj. With bitter memories of cancelled orders, out-ofstock products and website crashes on Flipkart's Big Billion Day sale, online shoppers were hoping that its rivals would have worked out a seamless strategy to handle surges in demand. But at 7am on Tuesday , when Snapdeal started its sale, shoppers were confronted with numerous surprises including a blank site, discounted products that were conspicuous by their absence and checkout pages that did not work. It reminded them of Flipkart's Big Billion Day sale when millions of online shoppers were left high and dry despite the e-tailer raking in Rs 600 crore in 10 hours. Later, Flipkart founders Sachin and Binny Bansal tendered a public apology for not meeting the expectations of their consumers.

• Vodafone India Outshines Global Peers in Sept Qtr: Vodafone India outshone global counterparts in the April-September period, driven by higher data usage and rising call rates, although it faces a battle for survival in four circles where its permits are expiring, leaving it in a mustwin situation for airwaves as it does not have any fallback spectrum. India’s No. 2 telecom company, like its top rivals Bharti Airtel and Idea Cellular, reaped the benefits of lower competition after the Supreme Court cancelled 122 telecom licences in 2012 and continuing strong user additions in a market counted as among the fastest growing in the world. Country Chief Executive Officer Marten Pieters said offering limited spectrum in auctions likely to be held in February, as indicated by the government, would lead to massive business disruption. “It would be a disaster for existing operators whose hundreds of millions of customers are using the existing spectrum,” he told reporters. “We think it is wrong to do an auction if there isn’t enough fresh spectrum, which means that if an incumbent is unable to buy back his existing spectrum, he has to close shop.” Vodafone India, in which the parent took full control earlier this year, will have to bid aggressively in Maharashtra & Goa and Rajasthan where it does not have any backup 1800 MHz spectrum, while the Gujarat and Uttar Pradesh (East) circles do not have enough quantum of airwaves in the 1800 MHz band. Further, the quality of existing 1800 MHz airwaves in the second set of circles is poor, executives at the company explained. “In the last auction, there was a limited availability of 900 MHz, but there was fallback of enough new 1800 MHz,” he said. “In this auction, you simply lose your busi ness, which means thousands of crores invested into the business will be lost,“ Pieters said, pointing towards an immense hit to global investor confidence in India.

• Cabbies Hitch a Ride on Aggregators: Riding on the success of taxi aggregation service providers Uber, Ola Cabs and Taxiforsure, traditional cab services and aggregators including Helioss Travel and Bookmycab are entering the market, flush with investments.These firms are relying on acquisitions for gaining a foothold in the market dominated by big players which work on a marketplace model. Mumbai-based black and yel low taxi aggregator Bookmycab has announced its entry in the southern zone through acquisition of Hyderabad-based Cabonclick. The buyout will provide access to 150 cabs to the company, which aims to scale up to 500 cabs within six months. “We are looking to add 10-plus cities over the next six to eight months and Delhi will be our next launch from where we will be spreading to the northern zone,“ said Avinash Gupta, CEO of Bookmycab. The company had earlier this year announced that it would raise Rs 40 crore to fuel its expansion. Corporate car rental company Helioss Travel has launched its direct consumer facing business, Magic Cabs, in Bengaluru with an initial investment of ` . 10 crore in the new segment. The company plans to raise about ₹40 crore of fresh funds to expand its footprint. Magic Cabs has launched with a fleet of 100 cabs in Bengaluru and it expects annual revenue of ` . 600 crore in five years. The high valuations and size of the market are the major drivers for the entry of traditional businesses in taxi aggregation service. “We expect Magic Cabs to be our fastest growing and largest business segment in the next couple of years,“ said B Rajiv, CEO of Helioss Travel Solutions. Gupta of Bookmycab said his company would go for a mix of organic and inorganic growth, depending on the market, and focus on underserved markets for expansion.

• Makaan on Sale; MagicBricks, Quikr in Talks for Acquisition: As India's online real estate attracts attention, owners of Mumbai-based venture may sell or may form JV with backer People Group, which owns and operates real estate portal Makaan.com, has entered into talks with potential buyers, to sell the venture, at a time when the country's online property space is being seen as the next battleground for global risk capital and strategic investors. MagicBricks.com and online web and mobile classifieds company Quikr are among those believed to have held early-stage discussions with the promoters of Makaan.com, according to two sources with direct knowledge of the developments. A potential transaction could see promoters of Mumbai-based venture, either outright sell its entire stake, or enter into a joint venture with a new backer, which could see the promoters divest up to 50% of their ownership, and which will al so have a long-term payout component built into the agreement. Anupam Mittal, the founder and promoter of People Group, declined to speak on the developments, while emails sent to MagicBricks.com and Quikr did not receive any responses at the time of writing the story. Separately, Info Edge, which owns real estate portal 99Acres, and was speculated to be in talks with promoters of Makaan, denied they were looking to pick up a stake in the venture. Info Edge, which owns a clutch of Internet properties, had raised ₹750 crore through a qualified institutional placement in September. According to some reports, Info Edge planned to use the proceeds for potential acquisitions for 99Acres. Separately , Info Edge, which owns real estate portal 99Acres, and was speculated to be in talks with promoters of Makaan, denied they were looking to pick up a stake in the venture. Info Edge, which owns a clutch of Internet properties, had raised ₹ 750 crore through a qualified institutional placement in September. According to some reports, Info Edge planned to use the proceeds for potential acquisitions for 99Acres. Mittal, who owns about 80% of the property website, runs a slew of internet properties, such as matrimonial website Shaadi.com and mobile media company Mauj.com.

• Consumer electronic firms get tough with e- tailers: The hue and cry over Flipkart’s Big Billion Day Sale last month has prompted consumer electronic companies to take safeguards against deep discounting. LG, Samsung, Videocon, Sony and Panasonic have instructed their trade partners that products sold through online marketplaces without their knowledge during flash sales will not get the benefit of after- sale service and warranties. This comes as companies try to clamp down on sales by small dealers who offload products on online marketplaces for a small margin. Parallely, the companies have also initiated talks with online marketplaces to be fair in pricing. These initiatives taken by companies became obvious on Tuesday during Snapdeal’s Savings Day Sale and Amazons Appiness Day. Heavy discounting below market operating price was avoided by both players, besides a more structured way of conducting the sale. Snapdeal’s star product, the iPhone 5s, which has a market operating price of ₹ 35,000, for instance, was available for ₹ 31,499 or 10 per cent less. Similarly, Micromax’s HD LED was available for ₹ 19,990 ) on Snapdeal and the Blackberry Z3 was available for ₹ 11,111 on Amazon, which was similar to the discounts available in offline stores during Diwali. The ‘ unauthorised sale’ clause for dealers was pressed into service by all companies on Tuesday to avoid what happened on October 6, when brick- and- mortar retailers were agitated over the deep discounting by Flipkart of television sets and mobile phones. “The flash sales by Snapdeal and Amazon were not marred by controversy or complaints by consumer electronics companies,” Amit Chadha, secretary- general of the Consumer Electronics and Appliances Manufacturers Association, said. “ During Flipkarts Big Billion Day Sale, we received complaints within the first two hours. There was complete chaos. This time around there were no such issues," he said. LG was the first company to issue an advisory after Flipkarts sale, saying it had not authorised any e- commerce company to sell its products in India, it could not vouch for the genuineness of the products sold online and it retained the right of not extending additional services and warranties on such products. When contacted, LG executives said their stand had not changed and they continued to deal with only offline retailers.

• Future Lifestyle Fashions completes its 80% acquisition in fashion brand Giovani: Future Lifestyle Fashion, the listed entity of Future Group, has completed acquisition of controlling 80% stake in Giovani fashion brand after sealing the deal in June for its owners Dhir International, a north India based garment manufacturer and exporter that will continue as minority partner with the remaining 20% stake. "This is a strategic move as talks were on for almost a year but the legal formalities have completed recently," says Rachna Aggarwal, CEO, Indus League a subsidiary of Future Lifestyle Fashion. Aggarwal said the company already has strong presence in south India and Giovani's acquisition will help FLF to ramp up its footprint in north market. Aggarwal said the brand has core focus on designs specially suits and jackets and is popular for Italian cuts, fabrics having entrenched loyal customers in this segment.

• Amazon plans it big with India Post network to ramp up its delivery mechanism: E-commerce giant Amazon wants to do in India what Alibaba did in China. Amazon's India head Amit Agarwal on Tuesday met telecom and IT minister Ravi Shankar Prasad and urged him to allow the use of new technologies such as real-time tracking and monitoring devices on the India Post network to develop a delivery mechanism based on smart logistics. The government has sought a detailed proposal from Amazon, to which it will respond, a person familiar with the details of the meeting told ET. Amazon wants to leverage an improved India Post network to ramp up its delivery mechanism to within 24 hours anywhere within the country. Agarwal was accompanied for the meeting by Monique Meche, Amazon's vicepresident for international public policy. In an emailed response to ET's query, Amazon said that it is "looking for ways to deepen" its relationship with the Indian postal service which started last year. It currently uses the Indian postal services as a delivery channel, but it is looking to deepen this further, in line with what Alibaba did in China.

International:

• New Look pulls out of Russia citing 'political uncertainty': High Street fashion chain New Look has pulled out of both Russia and Ukraine citing "political uncertainty". The group, which had 20 stores in Russia and six in Ukraine, had previously selected Russia, alongside Germany, China and Poland as a key priority for expansion. It announced the decision as it reported an 89% rise in first half profit to £26.1m. New Look had run its stores in Russia via a franchise model. It had previously planned to buy out its franchise partner and move to a joint venture with a new partner to accelerate expansion in the country. Despite the decision, New Look said its international expansion plans were otherwise progressing well. It now has 14 stores in China, and said it was on track to have 20 there by the end of the year. In the UK, it said sales had risen 8% in the 26 weeks to 27 September, despite the "adverse second quarter weather impact". Several retailers, including Next and Marks & Spencer, have recently blamed lower-than-expected sales on the unusually warm September and October.

• Alibaba Singles' Day Sales Break Past $8bn: Ecommerce giant Alibaba's Singles' Day sales broke through the $8-billion mark late on Tuesday , illustrating the buying power of the Chinese consumer and the importance of the event in the retail calendar. The live sales figure on Alibaba Group Holding's giant screen at its sprawling Hangzhou campus surged past 2013's record high to the 50 billion yuan ($8.16 billion) mark with almost three hours left on the clock as Chinese and overseas shoppers bought heavily discounted online goods. The recent US listing, just eight weeks ago, seemed though to quieten company leaders. Jack Ma, the normally chatty executive chairman, shied away from the main media events, limiting himself to an interview with state broadcaster China Central Television (CCTV). The shopping day , similar to Cyber Monday and Black Friday in the US, comes less than eight weeks after its public share listing in New York, which set its own $25-billion record. Alibaba turned the Singles' Day celebration, a November 11 Chinese re sponse to romantic holidays like Valentine's Day , into an online shopping festival in 2009. It copyrighted the “Double 11“ term three years later after recognising its commercial potential.

• Gucci Unveils Revamped West Coast Flagship: When Gucci chief executive officer Patrizio di Marco and creative director Frida Giannini touched down in Los Angeles recently, their first official destination was the company’s long-awaited, redesigned West Coast flagship. The 22,000-square-foot store at 347 N. Rodeo Dr. here is in keeping with the brand’s global retail concept plus some tweaks — bigger windows to let in more light and invite visual interaction with the fabled street, and a new third-floor retail space comprising red-carpet dressing and made-to-measure salons for both women and men. From their respective salons, the designer and the executive addressed both the globalization of luxury as well as why the U.S. continues to be a land of plenty in an otherwise struggling global economy. “Globalization is part of our world, of our jobs today, so I think it’s important for houses and designers to understand that you don’t do anymore a collection for Americans or Japanese or Europeans. You just design a collection that is set for everyone, available all around the world,” said Giannini.

• Levi Strauss to Eliminate 500 Jobs: Levi Strauss & Co. will cut 500 jobs in the second stage of its global productivity initiative and transfer the responsibilities to Wipro Ltd. through a five-year outsourcing agreement. The new round of cuts, part of a plan begun in March to effect annualized cost savings of between $175 million and $200 million, will result in about a 3 percent reduction in its corporate head count of about 16,000 and will be focused on management personnel, taking particular aim at “duplicative roles” and excess layers of management. The first stage resulted in the elimination of about 800 jobs and annualized savings of between $75 million and $100 million, excluding charges. Levi’s didn’t attach a dollar figure to the savings it expects to realize from this round of reductions, although it did estimate it would pay Wipro about $143 million, a combination of fixed and variable charges, over the initial five-year term of the agreement for the information technology, finance, human resources, customer service and consumer relations services to be utilized beginning during Levi’s first quarter. The San Francisco-based jeans and sportswear giant expects to incur charges of between $45 million and $55 million from the restructuring, most of which are expected to be taken in the fourth quarter of the current year, which ends later this month. The charges cover severance benefits, retention bonuses and consulting fees. Wipro will begin to provide services to Levi’s during the first quarter.

• Nordstrom Rolling Out Shoes of Prey In-Store Shops: Nordstrom is rolling out in-store shops for Shoes of Prey, an Australia-based online firm that enables women to design their own shoes. It’s a partnership that plays to the growing trend of product personalization, and to two of Nordstrom’s strengths — shoes and customer service. Starting Nov. 17 and through the first quarter of 2015, shops called Shoes of Prey Design Studio at Nordstrom, averaging 250 square feet, will open inside six Nordstrom doors: Bellevue, Wash.; Paramus, N.J.; Pentagon City, Va.; Oakbrook Center, Ill.; Fashion Island, Calif., and San Francisco Centre. Nordstrom has invested heavily in new technologies and online businesses, and since early 2011, has acquired HauteLook and Trunk Club and taken a stake in Bonobos, suggesting Shoes of Prey could become another investment. However, executives sounded cautious, saying it’s something that might be considered further down the road. Michael Fox, the chief executive officer of Shoes of Prey, told WWD, “We talked to them about that. It’s definitely something to be considered, but not initially.” “We’re just starting out with our partnership, but if they asked us to consider investing in their business, we would certainly take a look at that,” added Scott Meden, Nordstrom’s executive vice president and general merchandise manager of the shoe division. “We want to serve customers in different ways and deliver highly relevant, personalized experiences. We hope the Shoes of Prey Design Studios in select Nordstrom stores will enhance our service experience by allowing customers the chance to play shoe designer and create completely customized shoes.”

• Brunello Cucinelli Profits Rise 10.2%: Continued expansion in international markets lifted Brunello Cucinelli SpA’s net profit and revenues in the first nine months of the year. In the period ended Sept. 30, the Italian luxury brand saw its bottom line grow 10.2 percent to 25.9 million euros, or $35 million, compared with 23.5 million euros, or $30.8 million, in the same period last year. Revenues also rose 10.2 percent to 277.3 million euros, or $374.3 million, compared with 251.7 million euros, or $329.7 million, last year. Brunello Cucinelli, chairman and chief executive officer of the company, said 2014 was a “fundamental” year for the group, “not only for the consistent growth reported by both revenues and profit, but also for the visibility and the positioning — at the top of the luxury segment,” of the brand. “We have just come back from some important business trips to the US and the Far East in the past weeks. And it is pleasing to realize how everything that comes from our splendid country is welcome with high regard all over the world. It easy to perceive a great admiration for our handcrafted products, for our culture and for our way of life,” said the entrepreneur. Touting improving results in Italy and an appreciation for the brand's spring/summer 2015 collections, Cucinelli said he believed “that this trend featuring healthy and gracious double-digit growth for both revenues and profit is likely to continue also in 2015.

Tech:

• Software Exporters Betting Big on GeNext Tech to Rake in Moolah: India's biggest software exporters are betting on next generation frontiers, including digital and social, mobility, analytics and cloud (SMAC) space to help them generate more business but analysts believe it will require more than simple talk to translate the expectations into business. Infosys, the country's secondlargest IT firm, acknowledging that only 25% of digital programmes are successful, puts a spotlight on some of the tall claims made by these technology companies. Worryingly, Infosys' partnership with IPsoft, the New Yorkbased company that relies on artificial intelligence to manage computer networks, is already being dubbed as a “disappointment“ by some analysts. “It (Infosys-Ipsoft partnership) seems to be going nowhere...It is probably about lack of ownership not least as Kakal (Chandrashekar) was pushed out,“ said Tom Reuner, an analyst at Ovum, a London-based IT research firm. To be sure, Infosys itself is investing in automation internally , as repeatedly said by new CEO Vishal Sikka. Infosys signed a revenuesharing partnership with IPsoft last April as the Bangalore-based company looked at becoming more competitive in the infrastructure management services, which accounts for 7.9% of the company's $8.2 billion revenues. But after senior vice-president Kakal left the company to join Mumbai-based L&T Infotech earlier this year, some believe that the partnership in the last 18 months has not yielded the desired benefits. Digital and SMAC does present a big opportunity: about 20% of the Global 000 leading companies are ready to engage in digital transfor mation, estimates Constellation l Research. Research firm Gartner estimates digital marketing budt gets will increase by 10% this year d to $110 million.e Recognising this opportunity, Ine dia's leading IT firms have shown an intent to garner a significant s share. Earlier this year, Wipro cre ated a business unit, called Wipro e Digital, in an effort to get business as customers across industries , look to cut costs. But after winning p three clients in the first quarter, the company did not specify any deal wins in the second quarter. Mumbai-based TCS estimates a $5 billion business from digital space in the coming five years but declines to share details of how it will go about with it for now.

• Brands Log on to Social Media With Bloggers: Even though Burger King skipped any prelaunch event for the media before opening its first outlet in New Delhi on Sunday, it invited about three dozen food bloggers a day before and organized a burger making contest for them. Similarly, in April, Pizza Hut took bloggers on a day tour of Delhi making them taste some traditional street food in old Delhi before introducing them to their Birizza ­ a mix of biryani and pizza. Jabong.com extensively uses bloggers in its magazine called Juice.Food companies, fashion brands, automobile makers are increasingly using bloggers to create a buzz on social media around products and brands. Many restaurant launches would now have bloggers or even separate sessions for them as they see them as a crucial tool to reach out to the social media. “The media is changing and we cannot constrict our public relations exercise to the traditional media only,“ says Riyaaz Amlani, chief executive of Impresario Entertainment and Hospitality that runs chains like Smoke House Deli and Social Offline. “Most bloggers have between 1000-6000 followers; which isn't a big number, but have a very differ ent impact than traditional media channels do.“ Food blogger Sourish Bhattacharya said many companies feel that bloggers offer an advertising alternative for them.“If they call 20 bloggers and their combined effect would be as good as getting a story in a newspaper,“ he says. “Bloggers immediately post on Facebook, they tweet. So, they get multimedia exposure by just calling the bloggers.“ Uma Talreja, chief market ing officer for Burger King India, says that currently about ten reviews done on Burger King by the bloggers are doing the rounds on Twitter.

• Microsoft unveils first Lumia smartphone without Nokia name: Microsoft Corp. said it would roll out its Lumia 535 smartphone this month with an affordable price tag in its key markets, dropping the Nokia name just months after buying the Finnish company’s handset business. Loaded with its latest Windows Phone 8.1 operating system, the Lumia 535 and Lumia 535 dual SIM will be priced at around €110 (about $137) before taxes and subsidies, Microsoft said in a statement. The phone will feature a wide-angle 5 megapixel front-facing camera and a 5-inch qHD display screen, the company said. Smartphones run on Microsofts’ Windows software, mostly Lumias, captured only 2.7% of the global smartphone market in the second quarter, down from 3.8% the year before, according to research firm Strategy Analytics. Microsoft completed its $7.2 billion deal to buy Nokia’s handset business in April. Nokia continues as a networks, mapping and technology licensing company. It owns and manages the Nokia brand and only licenses it to Microsoft.

• Yahoo buys video ad service BrightRoll for $640m: Technology giant Yahoo said it will buy digital video advertising service BrightRoll for $640m (£402m). The move would allow Yahoo to grow its video advertising platform, "making it the largest in the US", the firm said. BrightRoll does automated online video advertising for some of the world's biggest brands and its net revenue is expected to exceed $100m this year. A jump in video advertising would also help offset Yahoo's slowing growth and boost declining display ad revenues. "Here at Yahoo, video is one of the largest growth opportunities, and BrightRoll is a terrific, strategic and financially compelling fit for our video advertising business," said chief executive Marissa Mayer in a statement on Tuesday. Last month, Yahoo had reported that its third quarter revenue from ads fell by 5% from a year earlier. It has struggled to keep up with rivals like Google that have seen ad revenue grow by 17% in third quarter from a year ago. The acquisition is also Yahoo's first major purchase since receiving $9.4bn in September from selling part of its stake in Chinese e-commerce giant Alibaba.

• AT&T pulls out of in-flight wi-fi race: AT&T's ambitious plans to provide 4G in-flight connectivity have been shelved, the company revealed. The telecoms giant had been working on a service to challenge industry leader Gogo, a Chicago-based firm that has deals with Delta, Virgin and others. In a statement, AT&T said it was pulling out of the project in order to invest money elsewhere, especially in "international and video". Last week, the firm acquired Mexican operator Iusacell for $1.7bn. In April, AT&T and US conglomerate Honeywell announced plans to bring high-speed 4G in-flight connectivity to commercial airlines in the US. The companies said the bandwidth would be strong enough to allow for video streaming. AT&T is reportedly in the process of buying satellite TV firm DirecTV, which offers airline entertainment, among other products.